FIRB Approval in for Commercial Transactions in Australia

A Practical Guide for Foreign Investors and Their Australian Counterparties

If you are a foreign investor looking to acquire assets or a business interest in Australia, or an Australian business dealing with a foreign counterparty, you are likely to encounter the Foreign Investment Review Board (FIRB) approval process. Understanding how FIRB works, and planning for it early, is critical to ensuring your transaction can proceed on time and on the intended commercial terms.

This article gives you a practical overview of what FIRB approval involves, when it applies, and how to manage it effectively in a commercial transaction. The FIRB regime applies differently to acquisitions of residential property by foreign persons, which are subject to more prescriptive rules. For guidance on residential property acquisitions, see our article on Residential FIRB Approvals.

What Is FIRB and When Does Approval Apply?

FIRB is an advisory body that assists the Australian Treasurer in reviewing foreign investment proposals. The underlying framework is set out in the Foreign Acquisitions and Takeovers Act 1975 (Cth) (“the Act”) and related regulations. In practice, it is Treasury that administers applications and makes recommendations, with the Treasurer holding the power to approve, reject, or impose conditions on foreign investment.

FIRB approval may be required where a foreign person (or foreign government investor) proposes to acquire a substantial interest in an Australian business, acquire Australian land, or take an action that could result in such an acquisition. For commercial transactions, the most common triggers are:

Direct acquisitions of commercial land — whether approval is required depends on the type of land. Acquisitions of mines, public infrastructure, or vacant land for commercial development require FIRB approval regardless of value. Acquisitions of developed commercial land generally require approval where the value exceeds A$330 million, though higher thresholds apply for investors from certain countries under applicable free trade agreements.
Agricultural land — approval is generally required where the cumulative value of the investor’s agricultural land holdings exceeds A$15 million, again subject to higher thresholds for certain nationalities.
Indirect acquisitions — acquiring shares or interests in an entity whose assets consist wholly or substantially of Australian land or land-related rights (such as mining tenements, pastoral leases, or infrastructure assets) can also trigger approval requirements, with thresholds assessed by reference to the underlying asset.
Business acquisitions — acquiring a substantial interest in an Australian business or corporation may separately trigger FIRB approval requirements, with thresholds varying by investor type and sector.

The threshold position is not always straightforward. Thresholds interact with the character of the asset, the investor’s nationality, the structure of the acquisition, and whether the investor is a foreign government entity. In some cases, particularly for sensitive sectors or foreign government investors, the threshold is zero. It is important not to assume that a transaction falls below the threshold without taking specific advice.

What Does the FIRB Process Look Like?

Applications are made through the Foreign Investment Portal, administered by Treasury. The application requires detailed information about the investor, the proposed acquisition, the target asset or entity, and the investor’s intentions.

Under the Act, the Treasurer’s decision period is 30 days from the relevant triggering event (s 77). The Treasurer may extend this by up to 90 days by written notice (s 77A), and the period may be further extended by agreement with the applicant. In practice, the effective timeline is often longer still, particularly where Treasury issues information requests, which pause the clock entirely.

Application fees are also payable on lodgement and can be substantial, particularly for higher-value transactions involving land. These should be factored into transaction costs at an early stage.

Practical Timeframe

For most commercial transactions, a realistic timeframe is 6 to 10 weeks from application to decision for non-complex matters. For transactions involving foreign government investors, sensitive sectors, or national security considerations, the timeline may be considerably longer. Build this into your transaction schedule from the outset.

How FIRB Fits Into a Transaction

In most transactions requiring FIRB approval, the parties structure FIRB as a condition precedent to completion. This means that the transaction documents — whether a share purchase agreement, an asset sale agreement, or a contract of sale for land — are signed and exchanged, but completion (transfer of title, payment of the purchase price, delivery of possession) cannot occur until FIRB approval has been obtained.

This structure allocates regulatory risk between the parties: the buyer knows it cannot be required to complete without regulatory clearance, and the seller has the benefit of a binding agreement conditional only on FIRB. However, it also requires careful alignment between the FIRB condition and the payment and termination provisions of the transaction documents. Key issues to address include:

The condition precedent clause — what precisely constitutes satisfaction of the FIRB condition (typically, receipt of a formal no objection notification or written approval from Treasury).
The obligation to apply — typically the buyer is responsible for lodging the application promptly and diligently prosecuting it.
The deadline for approval — the date by which, if FIRB approval has not been obtained, either party may terminate. This must be set with the realistic FIRB timeline in mind.
Obligations on termination — what happens to any deposit or prepayment if the condition is not satisfied.

For transactions involving assets in sensitive sectors (including critical infrastructure, agricultural land, media, or transactions that may raise national security considerations) FIRB scrutiny is likely to be more intensive, and additional regulatory considerations may apply. Early advice is particularly important in these cases.

Key Commercial Risks

The most significant risk is straightforward: a transaction that is subject to FIRB approval must not be completed before approval is obtained. Completing a transaction in breach of the FIRB regime exposes parties to significant civil and criminal penalties, and the Treasurer may order the transaction to be unwound.

Criminal penalties under ss 84–85 include imprisonment of up to 10 years. Civil penalties (including under ss 92–93) can be substantial, with maximum penalties calculated by reference to the greater of a fixed amount or a value-based formula, subject to an overall cap of 2,500,000 penalty units.

Beyond the legal consequences, the commercial risks include:

Transaction delays — an underestimated FIRB timeline can disrupt settlement, trigger breaches of conditions requiring approval, and create ongoing uncertainty for both parties.
Premature commitment — while parties may enter into conditional agreements, committing commercially (for example, by paying deposits or incurring transaction costs) before FIRB outcomes are known can create material exposure if approval is refused, delayed, or subject to conditions.
Misaligned mechanics — if completion mechanics, conditions precedent, payment obligations, and FIRB timing are not carefully aligned, disputes can arise as to risk allocation, including who bears the consequences of delay, conditions, or refusal of approval.
Conditional approvals — FIRB approval may be granted subject to conditions (for example, divestment requirements, governance constraints, or ongoing reporting obligations). These conditions can materially affect the value or viability of the transaction and should be assessed early.

Where deposits or milestone payments are made prior to FIRB approval, transaction documents should clearly address whether those amounts are refundable if approval is not obtained or is granted subject to unacceptable conditions.

Exemption Certificates

Under the legislation, the Treasurer may issue an exemption certificate in certain circumstances. An exemption certificate does not exempt the holder from the FIRB regime. Rather, it is a specific form of FIRB approval that allows the holder to make acquisitions of a defined class without making a separate application each time.

For acquisitions of Australian land, a certificate granted under s 58 can provide up-front approval for a program of acquisitions, subject to the terms, conditions, and limitations specified in the certificate. In practice, these often include parameters such as monetary caps, time limits, or restrictions on the types of land that may be acquired.

Exemption certificates are most useful where a client is pursuing a portfolio acquisition strategy, participating in a competitive bidding process, or undertaking a program of similar acquisitions over time — situations where making a separate FIRB application for each transaction would be inefficient or commercially impractical. They are commonly used by institutional investors and developers with ongoing acquisition programs. Where only a small number of acquisitions is contemplated, the Treasurer may instead expect separate notifications to be made.

The key point is that an exemption certificate is still FIRB approval. It is obtained through the same regulatory process, assessed against the national interest test, and may be subject to conditions. It is not a mechanism for avoiding the regime.

Practical Takeaways

FIRB is manageable when it is planned for early. Problems usually arise when FIRB is considered too late or managed without proper attention to transaction structure.

Obtain FIRB advice early — before committing to a transaction, understand whether FIRB approval is required and what the realistic timeframe looks like.
Address FIRB in your transaction documents — ensure the condition precedent, obligations, and consequences of non-satisfaction are clearly and properly drafted.
Align FIRB with your commercial timeline — build the FIRB decision period into your transaction schedule to reflect realistic approval timeframes.
Account for the possibility of conditions — consider what happens if approval is granted subject to conditions, and ensure your documents address this scenario.
Do not treat FIRB as a formality — engage with the process seriously, provide complete and accurate information in the application, and respond promptly to Treasury requests.

Navigating the FIRB approval process requires careful planning and early legal advice. Whether you are a foreign investor acquiring Australian assets, an Australian business transacting with a foreign counterparty, or a developer or purchaser with foreign buyer obligations, our team can assist.

Call (07) 5532 3199 or submit an online enquiry.